If the marginal propensity to consume increases,
A) firms will increase production.
B) spending will remain above output until interest rates increase and equilibrium is restored.
C) the expenditure line will shift upward in a parallel fashion.
D) investment will have to fall to restore equilibrium.
E) too much output is being produced, and firms will cut production until equilibrium is restored.
Correct Answer:
Verified
Q116: An increase in the marginal propensity to
Q117: Each of the four spending components depends
Q118: If adding net exports to C +
Q119: The components that make up aggregate expenditures
Q120: The sum of the four spending components
Q122: According to the spending balance model, a
Q123: Suppose the expenditure line is given by
Q124: The 45-degree line identifies
A)all possible equilibrium points.
B)All
Q125: If real GDP is less than spending,
Q126: If there is an increase in government
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents